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These days any discussion of levels in the financial markets warrants the qualifier ‘for now’.  With that in mind, US equity futures are trading limit up (5%) on optimism that the FOMC will continue to pump liquidity into financial markets, Washington is going to act regarding emergency measures to limit the economic impact, and maybe even that testing will become more widespread.  We’re not out of the woods yet, and the headlines are going to get worse, but at some point the market will be able to look through that.  Just to give you an idea of how volatile the overnight session was, futures have basically traded in a range of 9%.

Read today’s Bespoke Morning Lineup for a discussion of the carnage in financial markets overnight and the latest tallies on Covid-19 cases.

You’re probably getting sick of charts showing how extreme the moves we have seen in financial markets over the last month have been, but the move in high yield spreads has only been seen at one other time in the last twenty years.  In short, when spreads rise it indicates increased risk aversion on the part of investors.  In the last four weeks, spreads have increased 386 basis points (bps) or nearly four percentage points. The only time we saw that rapid an increase was at the height of the financial crisis in October 2008.